Multiple Choice
Assume that a firm has a steady record of paying high dividends for years.A new management team decided to cut the current year's dividend in half without disclosing why.The market value of the stock fell 35% on the day the dividend cut was announced.Which of the following would best explain the stock market's reaction to the announcement?
A) empirical theory
B) dividend irrelevance theory
C) residual dividend theory
D) information effect
Correct Answer:
Verified
Correct Answer:
Verified
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